Bring Back the Original Estate Tax!

The modern estate tax, introduced in 1916, imposed rates ranging from 1% on estates over $50,000 (that would be estates over $1 million or so in today's dollars) to 10% on estate value exceeding $5 million (about $100 million in today's dollars.)

Why not try it again? The rules could be fairly simple, in part because the low tax rates wouldn't justify elaborate, costly tax planning. The persistence of community property might require a 50% marital deduction for marrieds in common-law states; charities would scream if there wasn't a charitable deduction. Otherwise, every estate over $1 million ought to be able to pay the low rates. And the U.S. Treasury would not fare too badly – most estate tax is (or was) collected from the estates of the truly rich.

Would bringing back the original estate tax leave the estate-planning profession in tatters? Probably not. It was the introduction of the 1916 tax that led Charles Ives to invent estate planning.